Good day, ladies and gentlemen, and welcome to the Q1 2016 Murphy USA Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct the question-and-answer session and instruction will follow at time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Christian Pikul, Director of Investor Relations. Sir, you may begin.

Thank you. Good morning, everyone. Thank you for joining us today. With me are Andrew Clyde, President and Chief Executive Officer; Mindy West, Executive Vice President and Chief Financial Officer; and Donny Smith, Vice President and Controller. After some opening comments from Andrew, Mindy will provide an overview of the financial results and then Andrew will open up the call to Q&A after some brief closing remarks. Please keep in mind that some of the comments made during this call, including the Q&A portion, will be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. As such, no assurances can be given that these events will occur or that these projections will be attained. A variety of factors exist that may cause actual results to differ. For further discussion of risk factors, please see the Murphy USA Form 10-K, 10-Q, 8-K and other SEC filings. Murphy USA takes no duty to publicly update or revise any forward-looking statements. During today’s call, we may also provide certain performance measures that do not conform to Generally Accepted Accounting Principles or GAAP. We have provided schedules to reconcile these non-GAAP measures with the reported results on a GAAP basis as part of our earnings release which can be found on the investor section of our website. With that, I will turn the call over to Andrew.

Thank you, Christian. Good morning and welcome to our first quarter 2016 conference call. I hope you all had time to read through the earnings press release we issued earlier this morning, where we reported net income from continuing operations of $85.9 million or $2.08 per share in the first quarter. Excluding the $56 million of after tax gain on the sale of the CAM pipeline, quarter earnings per share would have been $0.72 per share compared to $0.50 a year ago. Over the past several weeks, we have spent a fair amount of time on the road visiting investors and reviewing our independent growth plan. Throughout those discussions, we shared a simple formula for driving earnings per share growth. So on today’s call, I would like to start by highlighting our progress against the key elements of our growth formula. The first point is that organic unit growth is off to a brisk pace. Since the beginning of the year, we have opened three new stores and presently have 23 new stores under construction. We remain on target to add between 60 and 80 stores to our network this year. In addition, all 10 of the plant raze-and-rebuild stores are underway and expect to be opened for the peak summer driving season. Over half of the 120 super-cooler installations that are kiosk are completed with the balance to be wrapped up in Q2. Our 300 store refresh program is also on track. The second point is our fuel contribution showed resilience to and took advantage of market volatility. Retail margins of $0.111 per gallon exceeded the $0.10 on our last year and represent the highest first quarter margin since 2002. Product supply in wholesale plus RINs added an incremental $0.029 on a retail gallon equivalent basis this year compared…

Thank you, Andrew, and good morning, everyone. As Andrew mentioned, net income was $85.9 million or $2.08 per diluted share, which include $56 million of after tax gain on the disposition of the CAM pipeline system which closed on March 31. Total revenues were $2.49 billion in the first quarter compared to $2.92 billion in the same quarter of last year. The decrease in revenues was caused primarily by lower fuel prices, partially offset by an increase in store count. Adjusted earnings before interest taxes and depreciation and amortization or EBITDA was $83 million, up from $63.5 million from the prior year quarter an improved fuel margins and merchandise margins. The effective tax rate for the quarter was 38.4% largely in line with our expected rate that lower than the prior year rate due to discrete tax adjustment item made during the 2015 quarter. As of March 31, 2016, our long-term debt was $657.8 million reflecting increased borrowings due to the reinstatement of a term loan facility for $200 million. The term loan carries of four-year term and 5% per quarter amortization provision. The first payment of which is due in July and a facility has an interest rate of LIBOR plus 250 to 275 basis points trigger by total leverage. Our asset base loan facility was renewed concurrent with the term loan and carries an extended maturity the March of 2021. The ABL facility continues to remain capped at $450 million limit and a subject to periodic borrowing based determinations which currently limits us to $153 million. At the present time, that facility continued to be undrawn. Cash and cash equivalents totaled $195.7 million at March 31, along with $130.9 million of asset sales proceeds held in escrow for like kind exchange treatment. Including cash and restricted cash net debt at quarter end is approximately $361 million. During the quarter of Andrew mentioned we repurchased nearly 3.4 common shares for $150 million at an average price of $62.50 per share under the previously announce program up to $500 million to be completed by the end of 2017. Shares outstanding at the end of the period were $39,396,549 million. Lastly, capital expenditures for the quarter ended March 31, 2016 were $41.7 million which included approximately $33.3 million for retail growth, $4.9 million for retail maintenance and the remainder for other corporate expenditures which were primarily ASaP related. We currently expect full-year 2016 capital expenditures to be in the range of our previous guidance of $250 million to $300 million. That concludes the financial update and I will now turn it back over to Andrew.

Thank you, Mindy. As you can see we’re off to a great start to 2016 on all fronts. The competitive and market factors remain very dynamic, whether it’s just in crude prices and refinery crack spreads were proposed labor, e-cigarette or EBT card regulations. This remains a highly competitive business which requires a great deal of focus and both execution and innovation the key phase. I believe Murphy as they continues to be poised to win in this environment because we have the clarity coherence and consistency of a strategy in value creation formula that has stood to test of time since where spend and all service well through our independent growth plan. We have a lot on our plate to execute yet remain excited about future opportunities to innovate and push the boundaries of our business model. Our staffs and our business partners have been very busy with the initiatives underway and I would like to thank them for their continued support. We have ask a lot of them already this year as we rolled out Core-Mark in less than 30 days launch the store label model than impact every store and operating practice. Upgraded systems that have been static for several years all well remodeling of 30-year old headquarters building well occupying it. Thank you. With that, we will open it up for questions. Operator.

Thank you. [Operator Instructions] And our first question comes from Ben Bienvenu of Stephens. Your line is open.

Yes, thanks. Good morning, great quarter.

Thanks Ben.

So I guess first, touching on full-year guidance, there wasn’t reference to it in the press release, but I know that hasn’t been your practice in the past, but I assume you guys are still comfortable with the $400 million to $440 million of EBITDA for the full-year?

That is correct.

Okay, great. Then I guess just looking at the merchandise margin, for me that in particular stood out as strong, even if you X out the $1.5 million contribution from the Lotto, margins were still up 100 basis points year-over-year and if I extrapolate that through the year and suggest something towards the higher end of your total merchandise gross profit projections for the guidance. I realize merchandise sales were quite strong in the first quarter two, but I guess the heart of the questions - I would like to get a sense of how you expect the cadence of that margin to progress as we move through the year what were your expectations when we enter this year for how that would progress through the year?

Sure. So the cadence that is going to be most sure and reputable benefits were the benefits from Core-Mark rolled out in February full benefit in March will get for the remainder of the year and you know that represents maybe a little over 50% of the improvement on the cigarette side. A big portion of the cigarette increase was also due to the changes in the minimum mark up requirements in Tennessee which flow through the margin although there was sharp impact and volume when you have those changes and there is also a state tax increase in Louisiana. So those become kind of one-time items that flow through and then ultimately work is play through the system. The non-tobacco improvements, had less to do the Core-Mark and more about execution but there were sometime benefits there clearly the Lotto was a nice one-time benefit. We also got some shelf allowances and we think about the super cooler in the larger stores at some point given or very small starting position we start qualifying for certain rebates and allowances that we didn’t before and certain non-tobacco categories and so some of those were one-time. And I think we estimated if you kind of take some of those factors out that 15.3% probably would have been a lot closer to 14.8% or 14.9% which is still a significant improvement over the prior year quarter. So if I can say that’s those are some of the one-time impacts we’ve been expect to see that gradually improve over the quarter because you’ll have three months of Core-Mark in the remaining quarter versus one to two months in Q1. Does that help Ben?

Yes, that’s great detail. Thanks. A question for Mindy, you guys have added post the quarter an incremental $200 million in debt, but still at the midpoint of your EBITDA guidance range: sub two times debt-to-EBITDA. I know in the past you’ve stated a goal of 2.5 times debt-to-EBITDA and 45% debt-to-cap, which it looks like we’re currently above. I suspect that drifts higher as you execute your share repurchase strategy. But can you help me think about – is that 2.5 times debt-to-EBITDA goal a cap on where you’d like to be? Or is that sort of the leverage a ZIP Code you think you could live in at a run rate basis longer-term?

I wouldn’t necessarily call this 2.5 times a target I would refer to it more as a maximum our cap rate. Because it happens to be the level at which within our indenture agreement of starts restricting our ability to do things like share repurchases. So if you look at the trailing 12 months EBITDA at the end of the quarter obviously we can still have some debt added and still be under the 2.5 times as we finished the quarter about 1.88 times.

Okay, great. Thanks and then just one last quick one for me. The retail fuel margin in the quarter, I know it was a tough second half to the quarter; it looks like you navigated nicely through that. Can you speak to – I think of you guys as a low-price operator, and I suspect you want to lead the market down but you don’t want to lead the market up. So how do you navigate through a rising price environment and deliver a result like we saw in the first quarter here? And I guess a related question, the competitive landscape, what it looked like. We hear continual chatter around maybe an appetite for higher margins out in the market, but maybe that’s not true in your lower-price competitive set?

Sure. So I am going to avoid having a discussion about competitive pricing and price movements in this forum. But I would describe the quarter is really kind of tale of two periods you had the January to early part of February or you had a nice falloff in prices and typically we gain both volume and margin during that period which we did and volumes were strong and January and February even with the extra day in February, we were still over 100% and then you had that rapid run up in March $0.44 from the low in February to the end of March, that’s a pretty steep run up. So you started the period you know with that run up with healthy margins and then there’s just a competitive dynamic in which players behave rationally you navigate through that. Certainly that challenges volumes on the way. So our goal is to remain the low price or match the low price competitor in the marketplace because we have to face all consumers every day we [indiscernible] erode that value proposition. And so we’re going to be at some way at the mercy of the price movements and would continue to run up and prices margins get squeeze further and little pressure on volumes. But as we know they run up and then they fall off and typically they fall off pretty sharply and then you have those periods of high margins and volumes that offset that. And so I think that’s what hopefully folks have gotten the test and the seeing is that over any rolling 12 month period those cycles ebb and flow and you’ve got a much more sustainable position, then if you look at it on any monthly or quarterly basis.

Great. Thanks and best of luck.

Thanks Ben.

And our next question comes from Bonnie Herzog of Wells Fargo. Your line is open.

Good morning.

Good morning, Bonnie. So I had a question on your store labor model just I was hoping to get a little bit more color and maybe some examples of what types of incentives are working. Also could you give us a sense for how much you’ve completed in terms of this opportunity you know for instance have you implemented more than half of the opportunities you’ve identified?

Great. So, maybe in terms of timing you know this started last year and some pilots stores in the district of Louisiana. We rolled it out fully in the Louisiana division and then rolled it out in the Florida division, so we had the benefit of those pilot stores as we started the year. The remaining of the stores were going through training, so we had additional hours allocated in the quarter for training up those new stores and so you know universally we had the pilot benefits offset the training hours in Q1 So we’ve now started the rollout in the other divisions beginning in Q2. Different stores and divisions will be at a different pace depending on sort of the complexity of the changes and where the starting point was for the stores, we’ve had some stores that were already at the ideal hours, but maybe their practices needed to be adjusted to deliver the activities and standard operating practices to live within those hours. There may have been some stores that needed to add hours, but again it’s all about the practices that lead to more efficient daily activities, better customer interaction, store cleanliness and the like. I mean we’ve talked about some of the practices that led to the savings but a lot of it was just kind of basic store operating practices for things that consume the most time so if you think about a daily close process where you think about a tobacco, cigarette counting activity because the company had grown so rapidly during the early years. There just wasn’t the kind of model in place that was consistent across all the stores, there is a lot more kind of tribal knowledge in way of doing things, so it’s really about just taking a more consistent approach to everything we do at the store.

Okay; that makes sense. It sounds like then, listening to you, a lot of this has already been implemented. You’re seeing the benefits of that, and I assume you’re going to continue to see the benefits this year. Do you think you’ll also see the benefits from some of these changes into next year as well, Andrew?

Yes. Let me just kind of modify a little bit what you said. We’ve implemented in two divisions. We’ve completed the training in the other divisions. We’ve started the rollout in the remaining divisions and so we will start to see those benefits in Q2 and Q3 as that work is fully implemented throughout the year. I do believe we will see additional opportunities in 2017, one because it’s just a continuous improvement culture, but once we have these operating practices in place there are some secondary and tertiary levers that we can pull as well to further enhance that labor position. And of course, then you’ve got headwinds out there in the marketplace proposed regulations and so forth that could impact it. One of the things that for example that offset Q1 labor was the fact that we awarded more transactions when we’re selling three times the number of lotto/lottery tickets in January during the jackpot. And so the additional contribution there more than offset the higher labor expense in that period, but our model now was able to be more adaptive and responsive and agile to changes like that in the marketplace good or bad.

Okay; that makes sense. Then another key initiative of yours, Andrew, is your refresh program, which you touched on. And I think you’ve mentioned before that you anticipate seeing a 1% merch lift and a 1% fuel volume lift; so I just wanted to confirm that that’s in fact possible as you kind of roll this out through your store base.

Right. So those were the early results from last year, clearly we don’t have a full-year yet, but when we compare them against control sites in the same district or area that was the average improvement we’re seeing, so we’re continuing to proceed – I would say that we would proceed even without those benefits, because of the need to just refresh the look in the image in the consumer perception of the store. So we will also get benefits and reduce the maintenance expense because of the warranties on some of the items and some of the sort of the brick veneer cladding on the metal buildings can be powerwashed versus painted, so there’s a total lifecycle benefit on top of any topline benefits.

You mentioned there’s 300 of those, I think, you’re planning on completing this year. Is that correct?

That is correct.

Then just my final question is on your share repurchases. You mentioned that you completed 30% of your buyback, which is authorized through FY2017. So guess I’m wondering if there is an opportunity here for you to recommend to the Board that they implement another share buyback program. I guess I’m thinking about this especially considering your strong balance sheet. Then also if you could remind us on your thoughts regarding a dividend, and would that ever be a consideration, thanks.

Yes. So on – whether to do it – the next tranche, we have the liquidity, we have the commitment, we have a shareholder value model that gives us a good sense of when the stock is fairly valued or undervalued, so I think with that perspective we’re in a position to keep the Board continuously advised on the relative merits of doing more or less and we’ve been having the same conversation since the spend. On a dividend policy, I think investors want to first see organic earnings growth above and beyond anything else and that’s why we like our simple value formula, because it’s anchored in organic unit growth and organic earnings growth. I think then the question becomes if you have not sacrificed that what do you do with the extra capital, our sense from investors as they want to see something meaningful. And we believe at this point in our Company’s lifecycle share repurchases are a more effective and efficient way to distribute value to shareholders. Especially given the volatility of our business and some of the lumpiness it has and so our sense is that special dividends aren’t viewed as favorably has consistent share repurchase programs. And then on regular dividends our view is that it should be meaningful or why bother and so while we’re doing meaningful levels of share repurchases at some point having a meaningful dividend of 2.5% and 3%, 4% would crowd out the ability to do that. So our bias and focus has been on a more ratable approach to share repurchases ratable over the course of the year versus quarterly period, do it with a strong view of what our valuation is and leverage or liquidity to be able to do that. So I think it’s not if we ultimately declare a dividend, but when and I think it would when we can do it at a meaningful level.

Okay. I appreciate that. Thank you.

And our next question comes from Chris Mandeville of Jefferies. Your line is open.

Good morning. Congrats on the quarter.

Thanks, Chris.

So Andrew, despite that fuel price run-up in March, you guys showed some nice gallon comp growth, as have many of the retailers whom have already reported the quarter. And it sounds like from the industry that they expect trends to kind of persist as we head into the summer months. So I guess first off I’d be interested in getting your take on that. And then second, if it were to in fact persist, how would or how should we think about the impact to your PS&W and RINs pricing?

Sure. So there’s a lot of very short-term sources for fuel demand out there and then there are some near-term ones like vehicle miles traveled that ultimately getting the authoritative data, there is about a four-month to five-month lag and we’ve just got it for December and when we look at our core markets, 2015 is the whole macro fuel demand was up 3.87%. And you know I think that’s a pretty remarkable number you know still have EIA and the other long-term forecasters describing a flat a 1% decline over time. But the reality is when you have very low prices, consumers decide what vehicle to purchase based on their expected lifecycle economics and the population’s not growing any faster you just have more people buying higher or lower mile per gallon vehicles, light duty trucks et cetera even though they are more efficient than the light duty trucks five years ago. And so we do see demand a good levels and we also see the low prices which is quite different than when we’re at the same time we were at this demand level in 2008 when prices were high. And so you know we would hope to be beneficiaries of that as we continue to add stores, we’re growing total share, clearly others are doing that in our markets as well and that’s why some of our average pre-store month numbers, we project a decline in about a 0.5% based on that. So we think will be the beneficiary of you know demand as it continues to grow. If demands against the slow down is probably more likely due to higher prices. And what we typically see in that environment is consumers get more frugal. And then they shift towards the lower priced outlet and so we become a beneficiary of that were as a really low prices. Consumers on the margin won’t go as far out of their way to buy at a low price outlet. At the same time, there’s a lot more low price out lets and there were five or ten years ago based on the competition. So will be some - puts and takes out there but net net we think we’re well positioned to capitalize on that trend.

Okay. And just as it relates to PS&W and RINs pricing, anyway to connect the two to increased demand?

Yes, so on that side increased demand would have a benefit in terms of tightening the overall refined product supply chain. So we’ve seen inventories consistently above the five year average. You know higher demand pulls at those inventories. We’ve seen utilization come off a little bit. I think crack spreads are closer to $18 a barrel where they were $28 a barrel a year ago, so refiners are quite as motivated to push that extra barrel out the door as they were. When you see more demand it also at some point puts on constraints on the logistic systems we’ve got a couple of cycles in the current quarter where the colonial pipeline has been down for maintenance. That type of bottom line constraint raises the wholesale price for markets and we’re a beneficiary in that, we have a proprietary barrel going through that system. So I think on balance higher demand will flow PS&W in a positive way. You will still have the impact of rising and falling prices, which has a lead lag effect either on inventory timing. differences and the like. As it relates to RINs, it should take a little pressure off of RIN prices in the sense that the overall refinery complex will be producing more gallons that are met by demand in which a RIN is captured, so the supply demand for RINs should not be as tight. But then you’ve got the regulators who will be announcing hopefully by the end of May there proposal for the RFS ethanol mandates for 2017. And then those are enacted in November and so depending on whether or not they ratchet up. You know the ethanol mandate or not that benefit of balancing the supply demand of RINs maybe short lived if they decide to raise the mandate further.

Okay; that’s actually very helpful. Then, Mindy, you guys showed some really nice free cash flow generation in the quarter. When I look at your cash conversion cycle, it looks like days payable saw quite a bit of bump there. Is that a function of the new Core-Mark deal? Have you begun to see any type of working capital improvement as it relates to your ASaP program yet? And can you provide any color or remind us on where you think free cash flow is going to shake out this year?

Thanks for the question. The difference in the payables a lot of it is due to just timing of when invoices happen to hit at the end of quarter and what day the end of the quarter was this year versus last year. As far as our ASaP initiatives, as we have stated previously we do expect to free up approximately fifteen $15 million in working capital from our inventory management, taking out a full run rate about a week’s worth of inventory, we expect to get halfway there this year with $15 million into another $15 million next year. We have already started to see modest improvement that initiative has not rolled out to all of the size. And Andrew mentioned we’re rolling out a lot of things to the stores, inventory management being one store labor and accounting software and we really put all activities on hold during the month of February, so we could make sure that the Core-Mark rollout was seamless. And so we would expect some of these improvements to be more back-end waited for the quarter. And then looking at free cash flow if you are assuming $400 million to $440 million of EBITDA and assuming that we spend the max rate of our CapEx of $300 million, we would actually be free cash flow negative, but for the fact that we have now added some debt proceeds of $200 million from our term-loan.

Right. Okay; That’s helpful. Then just the last one for me, can you update us on your Express store pipeline, what you’ve got out there so far? And Andrew, just quickly, how many refreshes did you actually perform in the quarter itself?

On the actually refreshes in the quarter we just got those started, so that’s a pretty low number, most of them will be in Q2 and Q3, I don’t know, Mindy, if you’ve got the exact number.

Chris, we only spent about $150,000 on those refreshes during Q1 because we just started ramping those up towards the end of the quarter. We obviously like to tackle those when the weather is nicer.

Got you. And just the Express store pipeline, any changes there in terms of the number that you currently have?

No, no changes there. No change in our outlook for this year and next year in terms of new store growth. So the land bank is a lumpy process as well we’re clearly trying to close as many locations as we can and associate them with like-kind exchange treatment. So we’re highly motivated to do as many of those as we can and build up that landbank.

Okay. Actually if I could get one last one in here, as it relates to the $130 million in restricted cash, can you just remind me when that becomes available again?

Part of it comes available tomorrow as we will free up the remainder of the Hereford proceeds, so call that around $35 million leaving the rest of it in the escrow until September. We closed on the CAM sale on March 31. So these proceeds will be held in escrow for the six months.

Okay. Great, thanks.

Thanks, Chris.

Our next question comes from Matthew Boss of JPMorgan. Your line is open.

Hey, congrats on the nice results this morning.

Thanks, Matt.

So we’re a quarter or so into Walmart’s gas station testing. Any updates that you’ve seen or impact on any of your stores when Walmart gas opens in the vicinity of a Murphy Express? Then on the landbank for the Murphy Express stores, are you finding it easier now to find good sites since you’re no longer limited by the portfolio approach?

Yes. I would say on the second question, it’s no less difficult for easier. We have the tools in place to identify the best performing markets, the attributes at specific local markets that would make a high performing side, a good performing side to a less than good performing side. The approach has really been last year not getting too far out in front of ourselves not knowing where we stood with respect to acquiring more sites from Walmart, so which really taking the same capabilities which we continue to refresh and enhance and then just applying them with more purpose than we did while that decision was still up in the air. What was the first part of the question? Just in terms of stores there’s really not that many stores where a Supercenter has been built in close proximity to one of our stores. And the results of those where it has happened frankly don’t look that different than if another high volume retailer opened up in a proximity. And so we’ve had competitive incursions, since the beginning we continue to have them on a regular basis. So first point is there are not that many and two there are not that different in terms of the impact.

Got it. And then just a follow-up. 4% same-store sales in the quarter, can you talk about the underlying drivers? Maybe any color on traffic ticket and just the best way to think about a sustainable comp rate going forward. And also just what you’re seeing in your larger kiosks versus the chain.

Sure. If you think about same-store sales growth of 4% versus average per store month of 1.8%. The biggest difference between the two is on the tobacco side were cigarettes are kind of ramping up at the new stores to get to their target levels. And so once I get to that target level which we expect with our small format to happen within 12 months versus some competitors talk about three to four years to ramp up, we can get ours ramped up within about a year. So if you think about 4% when you just have the existing stores versus 1.8% with the new stores added in then you can see the difference there. On the non-tobacco, the new stores actually contribute a little bit more there than the average per store month metric, because you’ve introduced a richer mix of larger format stores versus the kiosks, so you’ve added 70 stores in a year and 60 plus of those stores are 1,200 square foot formats and you’ve got 800 kiosk in the denominator and those haven’t increased that much even if those stores are ramping up, that’s improving as well. Some of the cigarette increase is also due to the fact that minimum markups increased in Tennessee, which is a high volume state taxes increased in Louisiana and so the cadence and likelihood that you have other Increases like that as well as other just price increases it’s pretty hard to project over time but we do have those on a pretty consistent basis.

Got it. Best of luck.

Yes, thank you.

[Operator Instructions] And our next question comes from Ben Brownlow of Raymond James. Your line is open.

Hey, congrats on the quarter.

Thank you.

Just a follow-up on an earlier question with the labor expense initiatives on average being flat per store. But when you look at those pilot divisions in Louisiana and Florida, how much on a per-store basis was labored down in those sites?

Yes. So I don’t have those exact numbers for those stores. But put it this way, it offset the training hours and it offset the increase in labor for a lot of and it also offset the fact that we have fewer vacancies than we had in overall labor from a store manager stand point. so we haven’t broken out those individual divisions. But it was a – it will be a material number when we roll it out across all the divisions.

Ben, I would say those are results that we saw in the pilot source did confirm our expectations for the store label model once it gets up the full run rate.

Okay, great. That’s all I had. Thank you.

Our next question comes from Carla Casella of JPMorgan. Your line is open.

Hi this is May in for Carla. I’m sorry if I missed this. But did you give a leverage target or like a comfort leverage ratio that you like to stay in?

I did our comfort level is two and a half times levered on an EBITDA basis for some perspective we ended the quarter about 1.9. I would consider that 2.5 kind of a maximum target, because once we get over that it starts inhabiting our ability to do share repurchases. So we like to maintain flexibility, so we would like to stay underneath that ratio.

Would you be taking it up to 2.5 in June, given your plans for capital and share repurchases?

Well, we have some flexibility within our independent growth plan of which we designated $500 million of incremental capital to be completed by next year. So we will be taking a look at cash flow versus CapEx for this year, next year also look at the price of our shares based on our proprietary model. If we think that they’re undervalued and it represents an opportunity to purchase more now then we obviously have some levers then which we could add even more leverage to the balance sheet in the near-term to accomplish that that’s just something we’re going to play by year for the remainder of the year.

Okay. Great, thanks. And just another quick question. How much will the Easter shift affect Q2 for this year?

The Easter shift?

Yes.

I couldn’t tell you right now the impact of that. I mean typically if you add an extra Friday or Saturday to a quarter that has a nice impact. And so it’s probably close to rounding error or not that material. If you add a day like February, leap year, that’s material. Adding a Friday or adding a holiday in one quarter or whatever it’s not going to move it materially.

Okay, guys. Thank you.

Our next question comes from Damian Witkowski of Gabelli & Company. Your line is open.

Hi, good morning. Could you – are you seeing any differences between geographies in terms of store performance?

We do and we always have. The Midwest market, with lower density and lower population and certain demographics, performs at a lower rate than the southwest and southeast from a fuel standpoint. Geographies that have more state minimum requirements on tobacco underperform those that don’t have those regulations in place. There are certain economies like Texas and Florida et cetera that are growing at a faster pace than others and the growth is made up of consumer segments that value a low price model, like ours and so you know every geography has its own flavor and you’ve got also competitors that focus on different geographies with their difference will offers as well. So it’s to say that all the geographies or market areas are similar would be an understatement they’re actually quite different.

That’s helpful. But I guess you’re not really seeing any impact from lower crude prices in terms of economies that are levered to that industry in particular falling off?

I mean if the question is are we loosing volume in South Texas where you know say Eagle Ford Shale production is off, we are just not as concentrated in a local market. So if we’ve got a store in front of a Supercenter and one of those towns, that town is still pretty active and busy we didn’t build up there are 15 convenience stores in that area and what’s they may be impacted more – or have more meal occasions that are impacted by it. So we probably didn’t benefit as much from some of those trends, but we’re not impacted on the downside to the same extent either.

Okay. And then food stamps [Audio Gap].

[Audio Gap] to deliver that offer means we weren’t able to offer. That method of payment in the first place. We are even and on our larger format stores we were probably under represented versus our potential to deliver EVT. So sitting at the beginning of this year it was more of a upside opportunity than a downside given the proposed regulations it’s not going to have a material effect on the last.

Okay. Thanks and congratulations.

Thanks Damian End of Q&A

I’m showing no further questions. I would now like to turn the call back to Mr. Andrew Clyde for closing remarks.

Right. Well thank you all for joining and listening and I know that we visited with many of you over the last several weeks of we’ve been out on some of the investor tours. We remain very confident of our strategy in our value creation formula and really excited about the. Q1 results providing proof points to that. So thank you all very much and we’ll look forward to next quarter.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may all disconnect. Everyone have a great day.